[Published originally in the November 2002 edition of Computing Research News, Vol. 14/No. 5, pp. 4, 11.]
The Federal Budget Cycle--A Primer
By Peter Harsha
This is the first of a two-part series explaining the Federal budget process. Part 2, The President's Budget in Congress, will appear in the January 2003 issue of CRN.
Part One--Writing the President's Budget
On February 4, 2002, President George W. Bush unveiled his fiscal year 2003 budget proposal, a plan for spending nearly $2 trillion packaged in a flag-bedecked stack of documents more than five inches tall.
The stack--a compendium of justifications and accounting for every dollar of federal spending at every federal agency and office-- represented the culmination of nearly a year of work by the executive branch and its agencies, but only the beginning of the annual cycle of debate and legislation necessary to fund the operations of government.
At this writing, the final budget for FY 2003 has not yet been decided and is unlikely to be resolved until Congress returns to Washington after the November 5th Congressional elections. Work on legislation to create a new Department of Homeland Security (still unresolved) and disagreements among the House leadership about a final total spending number--in essence, a decision about how much to exceed the President's budget request in appropriations--delayed consideration of all 13 of the annual appropriations bills necessary to fund the federal government in FY 2003, and have made the post-election return necessary. Until Congress returns, it is impossible to know the final disposition of many of the programs important to computing research. Instead, this lull in activity provides an opportunity to examine the mechanics of the budget process--how the administration produces its plan, and how the Congress disposes of it.
The President's Budget
Work began on the President's FY 2003 budget almost a year prior to its introduction last February. Indeed, shortly after the release of the current FY 2003 budget, analysts at the White House's Office of Management and Budget (OMB) had already opened the book on the FY 2004 budget by producing guidance for federal agency officials charged with drafting budgets for their own agencies. Although each agency draws up its own budget request, OMB must approve all agency budgets before they can be included in the President's budget. The process of creating an agency budget and having it vetted by OMB will take the bulk of the year, and will require input from a number of sources.
For federal research and development agencies, the budget process is coordinated through the White House's Office of Science and Technology Policy (OSTP), headed by the President's Science Advisor (currently Dr. John Marburger), in addition to the normal vetting by OMB. OSTP runs the coordinating office for several interagency research initiatives, including the National Information Technology Research and Development program (NITRD), which comprises all of the federal government's IT research programs. OSTP also provides guidance to agencies on the President's priorities for R&D funding for future budgets, although this guidance is heavily influenced by OMB.
In May 2002, agency directors received a memo entitled "FY 2004 Interagency Research and Development Priorities," co-signed by OSTP Director Marburger and OMB Director Mitch Daniels. The memo set forth the Administration's position on R&D priorities (which include continued support for NITRD activities) and spelled out the tests the Administration will apply to all R&D programs to see whether they warrant the Administration's continued support. The tests are culled from the President's Management Agenda, a document released by OMB in August 2001, which spells out the President's desire to develop R&D performance measures, or "investment criteria," that will "help improve R&D program management, better inform R&D program funding decisions, and ultimately increase public understanding of the possible benefits and effectiveness of the federal investment in R&D." The three tests--relevance, quality, and performance--are to be applied to all R&D programs agency directors hope to include in the President's budget.
Agency directors must also keep presidential priorities in mind when putting together their budgets. For FY 2004, OSTP and OMB have indicated six interagency initiatives to be given high priority in formulating agency budgets: Homeland Security and Antiterrorism; NITRD; Nanotechnology; Molecular Level Understanding of Life Processes; Climate Change Science and Technology; and Education Research. Funding increases in areas beyond those covered by these initiatives will have to be well justified, according to the memo.
In setting research priorities, the Administration looks to a number of different groups for recommendations. Among the most prominent are presidential advisory groups such as the President's Council of Advisors for Science and Technology (PCAST) and the President's Information Technology Advisory Committee (PITAC). PCAST is the most active of the presidential advisory committees for research issues. Made up of members from industry and academia--currently chaired by Marburger and Floyd Kvamme, a partner at a high-tech venture capital firm--PCAST is currently charged with providing advice to the President in four primary areas: research and development priorities; combating terrorism; broadband deployment; and energy efficiency issues. Their recommendations regarding R&D in the FY 2004 budget--they support increasing funding for the physical sciences, for example, and vigorous funding of IT R&D--should influence the President's final plan.
PITAC, on the other hand, has been a committee without members since January 1, 2002. Last year, the President extended the committee's charter (to evaluate the current state of the federal information technology research effort) through 2003, but did not extend any of the committee members' terms. Those terms expired at midnight on December 31, 2001, and no new members have been appointed. Although sources at OSTP say that the vacancies will be filled "soon" (as they have been saying since March), some outside of OSTP have suggested that the President's lethargy in appointing members to PITAC, which had a more academic membership than PCAST, is indicative of his distrust of academia generally. The President, according to this argument, is more comfortable with the industry presence on the PCAST panel and with technology advice from his close friend and Director of the Commerce Department, Don Evans, and the head of Commerce's Technology Administration, Phil Bond, than he is from a panel of academic researchers. Whatever the reason, PITAC will have no influence on budget deliberations this cycle.
After heeding the guidance of OMB and OSTP and soliciting feedback from the communities they support, agency directors must complete their budgets and submit them to the President by early fall. OMB then spends several months sifting through the budgets, deciding what programs to accept and reject. The process is held completely within the executive branch, and agency officials are not permitted to discuss with Congress or any other interested party what they have submitted to the President or any feedback they may have received.
OMB then sends the budgets back to the agencies (called a "passback") for changes, and to give the agencies one more opportunity to justify items in the proposed budget that OMB may have changed or eliminated completely. Although this is a confidential process, it is not unusual for details about disappointing passbacks to find their way to the affected communities, and for those communities to lobby against those changes even though they have not been made public.
Agencies typically have until December to return the budgets to OMB with required alterations, and many will spend the time until the deadline arguing against the changes, sometimes appealing to the President himself. After the final budgets are accepted and included in the President's budget, all arguments with the administration typically end, and agency directors present a unified front in defending the budget in Congress in the later stages.
This need--indeed, requirement--to unite behind the President's budget can put agency directors in the position of arguing against changes beneficial to their agencies-- increases proposed by Congress, for example--that they themselves may have proposed in the budget approval process. This year, for example, the President's budget contained only a modest 1.4 percent increase for the National Science Foundation (NSF) for FY 2003 over FY 2002. Congress, which has just completed a five-year effort to double the budget for the life sciences, now finds itself favorably disposed to do the same for the physical sciences (including computing research) at NSF. The House passed a measure authorizing the doubling of NSF over five years in late July.
As this article goes to press, two Senate committees have approved a similar plan and the measure is ready to head to the Senate floor. However, because the bill includes an authorization for FY 2003 that is significantly higher than the level requested by the President, NSF Director Rita Colwell has written to the Senate Commerce, Science and Transportation Committee asking that they oppose the nearly 15 percent increase already approved for her agency by the committee in favor of the significantly smaller increase proposed by the President.
After the formal introduction of the President's FY 2004 budget on the first Monday in February 2003, the agency heads will once again unite behind the President's plan, even as they begin their work on the next year's budget (FY 2005). Their work on FY 2004 is hardly over--they will be called to testify on behalf of their agencies before Congress in defense of their budgets. But their influence on the process is now secondary compared to the actions of key congressional committees and members.
(See January 2003 CRN for Part 2--The President's Budget in Congress).
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